Miners, Energy, and Financials Decline

123jump.com Staff
28 Jan, 2008
New York City

European markets were weak on the first day of trading. German stocks fell on the contiued jitters related to the direction of interest rates. MAN and Adidas fell after UBS lowered its ratings. Fraport fell 5% on the worries that Green Party win in election may hamper its expansion plans. Societe Generale dropped 4% to a three year low after citigroup rated the stock sell. Casino Guichard fell 1.6% after it agreed to raise its stake in Dutch retalier Super De Boar. Lafarge lost 5%.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – U.S. stocks rallied on the hopes that the Federal Reserve will lower rates at the end of the 2-day meeting scheduled to begin tomorrow.[/R]

European Markets

In London FTSE 100 Index closed lower 80.10 or 1.36% to 5,788.90, in Paris CAC 40 Index decreased 29.82 or 0.61% to close at 4,848.30 and in Frankfurt DAX index higher 2.11 or 0.03% to close at 6,818.85. In Zurich trading SMI decreased 105.15 or 1.37% to close at 7,581.73.

North American Markets indexes

Dow Jones Industrial Average added 176.72 or 1.45% to a close of 12,383.89, S&P 500 closed up 23.35 or 1.75% to 1,353.96, and Nasdaq Composite Index traded up 23.71 or 1.02% to a close of 2,349.91.

In Toronto TSX Composite closed up 92.07 or 0.71% to close at 12,986.90.

Of the 30 stocks in Dow Jones Industrial Average, 27 closed higher, 3 closed lower, and none were unchanged.

JP Morgan Chase led the gainers in the index with a rise of 4% followed by increases in American Express of 4.3%, in Citigroup of 3.79%, and in Caterpillar of 3.46%. McDonalds led the decliners in the index with a fall of 5.6% followed by losses in Microsoft of 0.67% and in Procter & Gamble of 0.03%.


Of the stocks in S&P 500, 432 closed higher, 64 fell, and 4 were unchanged.

One hundred and forty four stocks rose more than 3% and eight stocks fell more than 3%.

Dillard’s led the gainers in the index with a rise of 9.8% followed by increases in New York Times of 9.6%, in Harman International of 9.5%, and in Lennar Corp of 8.9%. Clear Channel led the decliners in the index with a loss of 7.1% followed by losses in McDonalds of 5.6%, in Precision Cast of 5.5%, and in Wendy’s of 5.3%.


South American Markets Indexes

In Latin Markets Brazil led the advancers in the region with a gain of 1.97% followed by increases in Mexico of 1.38%, in Argentina of 1.06%, in Chile of 0.42%, and in Venezuela of 0.03%. Peru fell 0.4%.

Asian Markets

In Tokyo Nikkei 225 Index closed lower 541.25 or 3.97% to 13,087.91, in Hong Kong Hang Seng index decreased 1068.76 or 4.25% closed to 25,053.61. Market of Australia was closed today.

In South Korea Kospi Index decreased 65.22 or 3.85% to close at 1,627.19, in Thailand SET index closed lower 15.36 or 2.02% to 744.36, and Indonesia JSE Index edged decreased 38.44 or 1.47% to 2,582.05. Sensex index in India decreased 208.90 or 1.14% to 18,152.78.

Bond Yields increased on 10-year U.S. bonds to 3.58% and on 30-year bonds gained to 4.28%.

[R]Commodities, Metals, and Currencies[/R]

Crude oil gained $0.33 to close at $91.04 per barrel for a front month contract, natural gas increased 11.00 cents to $8.09 per mBtu, and gasoline futures increased 1.08 cents to close at 232.900 cents per gallon.

Gold increased $18.50 in New York trading to close at $934.70 per ounce, silver closed up 29 cents to $16.78 per ounce, and copper for front month delivery increased 1.35 cents to 319.750 per pound and in London copper futures decreased $10.00 to $7,039.00.

Dollar edged lower against euro to $1.4794 and edged higher against yen to 107.071.


[R]2:00PM New York, 7:00 PM London - U.K home prices increased 2.3% in January, slowest price increase since June 2006.[/R]

Stocks in London tumbled after a report showed that U.K home prices rose slowest since June 2006. Also the Office of National Statistics reported today that households spent 50 pounds more on costs associated with their property in 2006 at 600 pounds a month.

In London trading FTSE 100 fell 1.36% or 80.1 to 5,788.90.

Of the 102 FTSE stocks 20 gained, 77 declined, and five were unchanged. Taylor Wimpey Plc led decliners with a drop of 5.22% as supply of new homes for sale plummeted 4.6% for the month in January.

Other homebuilders fell as well. Wolseley Plc lost 4.04% and Hammerson lost 2.36%.

Home Price Monthly Survey

According to a home market survey released by Hometrack Limited, home prices increased at a slower pace in January, a decline in rate for the fourth month in a row.

House prices fell for the fourth month in a row in January with average values falling by 0.3%, the same decline as last month. The growth in January from a year ago declined to 2.3%, which represents the lowest rate of growth since June 2006.

The average time to sell a property reached 8.5 weeks, the highest level since the survey began in 2001.

But the extent of price falls decreased over January, with agents reporting prices down across less than a quarter (23%) of the country, compared to 30% in December.

Family Spending Survey from ONS

UK households spent an average of £143 a week on housing-related costs in 2006, according to analysis in Family Spending, published today by the Office for National Statistics.

The ONS calculation is based on a comprehensive definition of housing and its related costs and includes £52 a week spent on mortgages, £24 on council tax, water charges and other local taxes and service charges, £23 on housing alterations and improvements and £17 on rent, net of rebates and benefits.

Housing costs now account for an estimated 19% of average household income.


UK Stocks
Of the FTSE 100 stocks London Stock Exchange led advancers with a rise of 2.14% followed by gains in Johnson Matthey of 1.82%, in Land Securities of 1.60%, in ICAP Plc of 1.45%, and in Intercontinental of 1.25%.

Taylor Wimpey led decliners in the FTSE 100 stocks with a drop of 5.22% followed by losses in Anglo American Plc of 4.83%, in Shire Plc of 4.30%, in Wolseley Plc of 4.04%, and in Sage Group Plc of 3.82%.

Retailers also fell on speculation that consumer spending will decline. Kingfisher shed 3.03% and Sainsbury edged down 2.47%.

Merger News

The Sunday Times reported in yesterday’s edition that the Brazilian government might block the $80 billion planned merger between Xstrata and CVRD. CVRD is the largest iron ore mining company in Brazil and one of the three large mining companies in the world by market capitalization.

Furthermore the government, which controls majority stakes through state development bank BNDES and state run pension fund controlled by Banco de Brasil, is also opposed to the transfer of $30 billion stock to Glencore as part of the cash-and-shares deal.

Brazil press reports on last week said the company had secured $50 billion in financing from HSBC, Lehman Brothers, and BNP Paribas for the takeover bid of Xstrata. Xstrata closed up 0.34%.


[R]1:30PM New York – Alliance Data plunged 35% after Blackstone Group cited regulatory hurdles.[/R]

Alliance Data ((ADS)), the credit card payment processor, fell 35% after Blackstone Group said that its purchase of the company for $6.5 billion may not happen.

Alliance Data said in the press release that Blackstone does not anticipate the condition to closing the merger relating to obtaining approvals from the Office of the Comptroller of the Currency (OCC) will be satisfied. The notice was given pursuant to the terms of the May 17, 2007 merger agreement among Alliance Data Systems Corporation and various entities controlled by Blackstone Group.

Alliance Data added in the press release that conditions for merger imposed by the Office of Comptroller can be satisfied by Blackstone and it disagrees with the stated assertion by Blackstone.

Blackstone''s notice did not assert any breach of the merger agreement by Alliance Data or the occurrence or anticipated occurrence of any material adverse effect on the Company, and acknowledged that the Company had, to date, used its """"best efforts"""" to obtain OCC clearance.

Neither did the notice reference or take issue with the financial or operational performance or liquidity of Alliance Data or its banks, or the parties'' ability to obtain Federal Deposit Insurance Corporation approvals related to the Company''s industrial loan corporation.


[R]12:00PM New York – Merger news dominated early trading in New York.[/R]

New Homes Decline in December

U.S. market average edged higher at mid-day. New home sales, weakness in European and Asian markets, and worries related to the weakness in financial sector dominated trading sentiment.

New home sales in December fell 4.7% from November to annualized rate of 604,000 and November home sales were revised lower to 13% from 9% to 634,000 annual rate.

New home sales declined 41% from a year ago in December, one of the worst declines in a decade. The median home price in December fell 10% to $219,200 from $244,700 in December 2006. For the year 2007, sales declined 26.4% to 774,000 units.

Sales of new homes declined 6.5% in the South, 6% in the West, and 1.2% in the Midwest. In the Northeast sales rose 6% in the month.

CME and Nymex in Preliminary Merger Talks

CME Group, operator of Chicago Mercantile Exchange, and Nymex Holdings Inc, operator of New York Mercantile Exchange, are in preliminary talks to merge.

Nymex is shareholders may receive $36 in cash and 0.1323 of share in CME in exchange of each NYMEX shares.

CME Group expects to maintain trading floors in the New York City metropolitan area. The potential transaction also contemplates that NYMEX will repurchase the 816 New York Mercantile Exchange memberships upon closing of the potential acquisition for an aggregate purchase price not to exceed $500 million.


[R]5:00AM New York, 7:00PM Tokyo- Subprime fears and comments from IMF Chief led Tokyo stocks down 3.97%.[/R]

Stocks in Japan dropped as exporters declined on a strengthening yen and on observations by the IMF that global economic conditions will worsen.

In Tokyo trading Nikkei 225 fell 3.97% or 541.25 to 13,087.91, while the broader Topix Index slumped 51.74 to 1,293.03. Market sold-off after comments from IMF Chief in Switzerland, worsening economic indicators, and worries that the U.S. stimulus package will not be enough to avert a recession in the U.S.

In first section of the Tokyo Stock Exchange 8.3 billion shares valued at 989 billion yen were traded and in the second section 493 million shares valued at 4.7 billion yen changed hands.

Of the Nikkei 225 shares 5 rose, 216 declined, and 4 were unchanged. Dainippon Sumitomo led advancers with a rise of 3.17% followed by Meiji Seika climbing 1.12%.

IMF Managing Director Dominique Strauss-Kahn said at the weekend during a public debate on the global economy at the World Economic Forum in Davos, Switzerland that there was no doubt that “there will be a serious slowdown that will require a serious response”, adding that governments cannot rely on monetary instruments alone to forestall a global economic slowdown.

Just months ago he had said that monetary stimulus will be sufficient and had urged the U.S. to restrain from any fiscal stimulus. His reversal of stance is partly from the worsening credit crisis in the U.S., spreading of American contagion to UK, and persisten choppiness in the global financial markets.

Bloomberg news reported today that Goldman Sachs chief economist in Japan Tetsufumi Yamakawa reported in a research note published today that declining domestic demand and wages, and falling industrial output will lead Japan into a recession.

Tetsufumi added that export shipments to China in the fourth quarter, though expected to offset a shrinking U.S. market, were growing at a much slower pace in volume terms than in the previous quarters.

Japan’s Financial Services Agency announced on its website yesterday that Kanto Local Bureau issued an administrative order against Teramento Corporation requiring it to submit correction of shareholdings reports submitted Friday on securities filings worth 20 trillion yen.

In the filings Teramento Corporation claimed majority shareholdings in Astellas Pharmaceutical Company, Sony Corporation, Mitsubishi Heavy Industry, Toyota Motor Corporation, Fuji Television Network Incorporated, Nippon Telegraph and Telephone Corporation.

Japan’s National Tourist Organization announced today that foreign tourists visiting Japan rose 13.8% from previous year to 8.3 million in 2007 on increasing number of tourists from Asian countries spurred by robust economic growth in the region.

About 2.6 million visitors were from South Korea, 1.3 million were from Taiwan and visitors from China jumped 16.2% from a year earlier to 943,400.

JNTO also added that the number of Japanese traveling abroad fell the most in five years by 1.3% year-on-year to 17 million.

Of the Nikkei 225 index shares Dainippon Sumitomo led advancers with a rise of 3.17% followed by rises in Meiji Seika of 1.12%, in Tokyo Dome Corporation of 0.87%, in Comsys Holdings of 0.36%, and in KDDI Corporation of 0.28%.

Tokyo Dome Corporation gained on Nikkei news online reports that transactions of office buildings and commercial facilities in Japan soared 31% from a year ago to 177 cases in December buoyed by strong demand for properties in the Tokyo metropolitan area from overseas investors.

KDDI Corporation rose after reporting Friday that net profit for the nine months to December rose 12.4% to 214.8 billion from a year ago period.

The company also reported that revenue increased 7.2% for the period under review to 2.64 trillion yen led by a rise of 1.9 million subscribers to its “au” mobile phone service.

KDDI president Tadashi Onodera added that the company now expects a record operating profit of more than 400 billion yen.

Sumco Corporation led decliners in Nikkei 225 stocks with a plunge of 11.46% followed by losses in Fanuc Limited of 9.09%, in Mitsumi Electric Company of 8.85%, in Fuji Electric House of 8.19%, in Mitsumi Engineering & Shipbuilding of 8.17%.

Exporters also fell after the yen gained from 106.72 to 106.08 against the dollar at the close of trade. Canon Incorporated fell 4.94%, Sony Corporation shed 3.52% and Toyota Motor Corporation declined 2.51%.